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Blockchain

Blockchain

Crypto-currency is the tag which is used to portray
all sorts of networks and exchange mediums. Those networks and exchange mediums
uses cryptography to store and carry secure transactions in a particular
encrypted form for those it is intended/transactions are channeled through a
centralized trusted entity. Crypto-currency offer cheaper and faster peer to
peer payment options and provides access anytime, anywhere globally without any
bank account and/or credit history. It is well-known that blockchain had been
invented for the Bitcoin, one of the best know crypto-currency, in the past. In
2008 a group or individual named Satoshi Nakamoto published a paper entitled
‘Bitcoin-A peer to peer electronic cash system’. Soon a new program was released
that began with the genesis block of 50 coins. A common man can install this
program and become part of the Bitcoin peer to peer network.

Blockchain also referred as distributed ledger. It
stores data in fixed structures called box. A block has two parts, a) header
having metadata like unique block reference number, time when it was created
and link for previous block and b) content which comprises list of digital
assets and statements like transaction history which is validated too. The data
can be verified and audited independently.

It will be interesting to see how a blockchain works
as depicted in Figure 1 below1

Figure
1 Financial transaction using
blockchain technology

Blockchain can be classified into various versions
based on development phase. First version is about virtual currency like
Bitcoin, alternative to real currency. Second version may involve automated
transactions via digital instructions and the third one may encompass
self-regulated decentralized autonomous version.

Blockchain’s disruptive potential seems to be
equivalent to commercial internet in early days. The attractiveness of
blockchain can be gauged by number of startups with an average valuation of $
4.4 million2. Venture Capital funding for Bitcoin and blockchain
startups reached $ 1 billion in 20153. Overstock.com became the
first company to receive the approval from US Securities and Exchange
Commission to issue shares using Bitcoin blockchain4.

Blockchain has several applications in financial
services like digital content & trading, foreign exchange, peer to peer
transactions. New York based clearing house Nasdaq has unveiled a blockchain
based system. London stock exchange, CME group, Societe generale & UBS have
formed a group to inspect how blockchain can be used to enhance clearing,
settlements etc. Citigroup, Barclays, Deutsche bank are exploring how to
integrate blockchain into their payment systems. Goldman Sachs has filed a
patent for its virtual currency “SETLcoin” recently. In non-financial services also
blockchain has various applications such as digital characteristics, possession
testimony, commodities like gold, network infrastructure etc. Blockchain is the
technology which lies beneath crypto-currency has the potential to disrupt a
broad array of transactions beyond conventional disbursement structure.
MedVault, prize winner at blockchain hackathon is a proof of concept that will
enable patients use blockchain to store medical history securely while
providing access control in emergency.

Blockchain will reduce the cost burden of
cross-enterprise business processes thus freeing up capital and shall open the
door for novel inventive digital transactions. It has potential to build a
global transparent digital economy. It help countries to strengthen economic
flexibility via cross border economic cooperation and to devise policy goals
for financial inclusion, sustainable development etc. Majority of experts and
executives in ICT sector predict that at least ten percent of global GDP to be
stored on blockchain platforms by 2025.